After Helping ZTE, China Warns Firms Not to Be ‘Giant Babies’

EnlargeSpencer Platt  Getty Images

EnlargeSpencer Platt Getty Images

Commerce Secretary Wilbur Ross banned USA companies from doing business with ZTE in April, after his agency learned that ZTE had not followed through on commitments made back in 2016.

The deal allows ZTE to continue to do business in the US while paying a $1 billion penalty for violating sanctions against Iran.

Last year, ZTE admitted to violating USA sanctions by selling US-made technology to Iran and North Korea.

A Commerce Department spokesman said on Tuesday that "no definitive agreement has been signed by both parties".

The US government has hit Chinese smartphone giant ZTE with a $1bn (£750m) fine as part of a deal to lift an export ban against the company.

ZTE said it would be forced to go out of business if its supply of optical components from companies such as Acacia, Finisar and NeoPhotonics dried up. Marco Rubio (R-Florida) on Thursday.

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In addition to the fine, ZTE has to allow unfettered site visits from the United States to make sure products are being used as claimed, post calculations of the U.S. components it uses to a public website, and also replace its board and executive team within 30 days.

ZTE's major markets are communications networks (which would include 5G networks now under development), IOT ("internet of things"), big data and cloud-computing products, according to the annual report.

Some members of Congress, Republicans and Democrats, say that absolving ZTE of its misdeeds runs counter to national security interests.

"We still retain the power to shut them down again", Commerce Secretary Wilbur Ross said Thursday in an interview on CNBC.

In return, the United States will be suspending - but not removing - the United States technology export ban that has caused the company to grind to a halt to begin with.

Back in April, the United States government announced a complete and total ban of any U.S. components manufacturers from selling to Chinese telecom and handset giant, ZTE (HKG:0763). "But it will do nothing to keep us safe from corporate & national security espionage".

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A Van Hollen provision already in the defense bill would require Trump to certify to Congress that certain Chinese telecommunications companies such as ZTE and Huawei have obeyed USA laws for one year and worked in cooperation with US investigators before pulling back the economic sanctions imposed on the companies.

Back in April, as punishment for continued violations of a previous export ban settlement with the US, the US Department of Commerce's Bureau of Industry and Security enacted a denial order against ZTE. The U.S. government has not signed the deal yet, however, ZTE has agreed to a previously drawn up deal. USA goods exported to China a year ago totaled $130 billion while Chinese imports to the US totaled $506 billion.

"The hope is accommodating China's concerns on ZTE will open the door to favorable decisions on Qualcomm and other deals", said Altbach.

Shares in NXP Semiconductors NV rose 4.9 percent in NY after news of the ZTE deal was announced.

ZTE supplier Oclaro Inc was up 1.3 percent while Acacia Communications Inc was down 0.6 percent.

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